Importing from Quicken

Charles Day cedayiv at gmail.com
Sun Mar 2 22:50:02 EST 2008


On Sun, Mar 2, 2008 at 6:05 PM, Ian Lewis <ianmlewis at gmail.com> wrote:

> Steve,
>
> What I think Charles was trying to say is, If there is a standard practice
> where you can record stock shorting using standard double-entry bookkeeping
> then yes. If not then no.
>

Yes, that's what I meant. Am I right in assuming that there isn't a GnuCash
druid which guides the user in recording shorts and covers?

I'm not an expert so I'm not sure how you might do it, but my hunch is that
> you can record these using standard double entry accounting. If someone
> knows how to do this the or has a good way of recording shorted stocks then
> please chime so we can update the wiki and/or documentation.
>

I'll take another crack at this... When you short a stock, you are selling
borrowed stock. So you have an asset (the sale proceeds) paired with a
liability (the shares you owe to your broker). Whether you actually receive
the cash right away doesn't matter. Your broker owes you the proceeds of the
sale (that's your asset, much like A/R), and you owe your broker the shares
(that's your liability).  When you later do the cover, you buy the shares
using the asset account and deposit them into the liability account. The
difference is your profit, which is a transfer from an income account
("Realized shorts", perhaps).

How does that sound?

-Charles


> Ian
>
> 2008/3/3, Steve <zephod at cfl.rr.com>:
> >
> >
> > ---- Charles Day <cedayiv at gmail.com> wrote:
> >
> > > On Sun, Mar 2, 2008 at 2:08 PM, Richard Ullger <rullger at ntlworld.com>
> > wrote:
> > >
> > > >
> > > >
> > > > Charles Day wrote:
> > > > >
> > > > > That is a good question. I have not tried to enter shorts or
> > covers in
> > > > > GnuCash. Off the top of my head, it seems like you would need a
> > > > "Borrowed
> > > > > Shares:Security Name" liability account for which the underlying
> > > > "commodity"
> > > > > (GnuCash term) is the security being sold short. Transfer shares
> > from
> > > > that
> > > > > account into your portfolio and immediately sell them. That would
> > be the
> > > > > short, leaving you with the cash you got from the sale plus a
> > liability
> > > > of
> > > > > the borrowed shares.  For the cover, buy shares for the liability
> > > > account.
> > > > >
> > > >
> > > > When you short shares, your broker borrows the shares on your behalf
> > and
> > > > sells them. You do not actually realise any cash for the sale so you
> > do
> > > > not have that cash to go and buy more shares. When you buy to cover
> > you
> > > > receive the difference between the sale and the cover if there was a
> > > > gain or your account is debited with the difference if there was a
> > loss.
> > > >
> > >
> > > Ah, yes, I had forgotten how that worked. Had I actually gotten around
> > to
> > > shorting ANF a few days ago as I had planned, I would have known
> > better. :(
> > >
> > > Anyway, I'm sure there must be a fairly standard way of recording this
> > type
> > > of transaction in a double-entry accounting package. If there is not
> > already
> > > a GnuCash druid/wizard to drive the process, then that would be a nice
> > > enhancement.
> >
> >
> > Err.. I'm still not clear on this. Does GC 2.2.3 in fact support
> > shorting stocks.
> >
> > Thanks,
> > Steve
> >
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